An upcoming sale of shares in OpenAI will put the financial impact of the company’s recent leadership turmoil to the test. Despite the chaos caused by the sacking of CEO Sam Altman, big investors remain optimistic about securing a high valuation. The employee stock sale, which was planned prior to Altman’s dismissal and expected to value the company at $86 billion, will proceed as scheduled, according to two investors familiar with the matter. This will be the first opportunity to gauge investor interest in OpenAI since the high-profile battle between Altman and the board exposed issues such as complex governance arrangements within the company. Despite concerns from analysts, major venture groups such as Thrive Capital, Sequoia Capital, and Khosla Ventures are confident in the potential of OpenAI and its valuation, despite the recent setbacks.
Clearly this almost destroyed a lot of value in the short term, it’s hard to say what happens next, said Vinod Khosla, an early investor in OpenAI. Valuation is a function of investor perceptions. The company is the same or better off than it was last Thursday.
However, experts have pointed out that OpenAI may face challenges as a result of the recent events, especially from strong competitors like Google and Amazon in the race to offer generative AI services to businesses and consumers. The controversy surrounding the leadership turmoil may have affected OpenAI’s valuation, prompting analysts to suggest that the company must take proper measures to restore investor confidence and improve its position in the market.
The resilience and strength we have seen from the entire OpenAI team in the past few days has been extraordinary, and we consider it a true honor to be their partners now and in the future, said Josh Kushner, founder of Thrive Capital, which had planned to lead the employee stock sale.
OpenAI’s co-founder Ilya Sutskever and other board members, including technology entrepreneur Tasha McCauley, Helen Toner from the Center for Security and Emerging Technology at Georgetown University, and Quora’s CEO Adam D’Angelo, were responsible for Altman’s dismissal. While three of the directors lost their positions when Altman returned, D’Angelo remained on the new board overseeing the transition—an aspect that drew criticism from experts who believe that a complete overhaul of the board would have been necessary.
Altman’s return as CEO has provided some relief for investors and may pave the way for a simplified corporate structure with a stronger focus on driving returns. Microsoft, which holds a significant minority stake in OpenAI, is also hoping for governance changes that would provide it with a say in the company’s operations.
Despite the recent challenges, OpenAI has been one of Silicon Valley’s most renowned and successful start-ups, leading the way in the AI boom. With a $10 billion commitment from Microsoft earlier this year, the company’s valuation reached $29 billion. The upcoming share sale will determine how the recent turmoil has impacted OpenAI’s financial standing and test investor appetite for the company.
